Don't leave yourself under-protected...find out exactly how annual benefits work in heath insurance policies.
In a perfect world, your health fund would provide unlimited cover for all the out-of-hospital health care services you receive. But we don’t live in a perfect world. Every policy will have a limit on the maximum benefit it will pay for various treatments as services. These are known as annual benefit limits and it’s important to be aware of the limits that apply to a policy before taking out cover.
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What is an annual benefit limit?
An annual limit is the maximum amount you can claim for a specific extras service, which resets at the start of a new year. The annual limits on your extras policy will depend on your health fund and the level of cover you have.
However, some funds also impose lifetime limits on certain benefits. Once you have reached this threshold, you will not be able to claim any more rebates for those services.
What are the types of services that have annual limits?
Annual limits usually apply to a wide range of general treatments included in extras cover, such as:
- General dental
- Major dental
- Orthodontics
- Physiotherapy
- Chiropractic services
However, there are certain parts of extras cover to which annual limits don’t usually apply, for example ambulance cover.
What is the difference between a combined limit and a sublimit?
When comparing extras cover, it’s important to be aware that sub-limits and combined annual limits may also apply. While your policy may have an annual limit of $1,000 for general dental services, there may also be a sub-limit that sets the maximum amount you can claim for a specific dental treatment, for example a routine checkup or a basic extraction. This sub-limit is subtracted from the larger annual limit.
However, combined annual limits may also apply. For example, your policy may provide up to $300 cover for each of the following services: physiotherapy, chiropractic treatment and osteopathy. However, those services may also be grouped together into one category with a combined annual benefit limit of $750 – so the maximum yearly amount you can claim for all the physio, chiro and osteo services you receive is $750.
How is annual defined?
The definition of annual depends on the calendar your fund uses:
- Some funds use the calendar year: 1 January to 31 December
- Some funds use the financial year: 1 July to 30 June
Your benefit tally resets at the end of each year, so check with your health fund to make sure you’re aware of what they deem to be the start of a new year.
When do your benefits reset?
Do these limits increase?
This depends on your health fund. With some extras cover policies, the annual limits remain the same each year.
However, with other policies, you may be rewarded for your loyalty with a benefit increase each year you remain a member. For example, your annual general dental cover limit in your first year of membership may be $500, but it may rise to $750 in your second year of membership and then continue to increase each year until you’ve reached a set maximum.
These increases typically only apply to some of the more major extras services, such as dental and optical.
Do these limits only apply to extras?
Yes. Hospital cover does not feature a set monetary limit on the benefit amount you are eligible to claim, so annual benefit limits only apply to extras cover. You can find out more about how hospital-only cover works in our handy guide.
What other limits can apply?
There are a few other extras cover limits you should be aware of. The first is a time limit, if you want to receive a rebate from your health fund for a health care service you’ve received, you must lodge your claim within two years of the service date.
The second limit you should be aware of is a service limit, as there may be a limit on the maximum number of times you can claim a benefit for the same service, for example an initial consultation with a physio, in a calendar year.
Finally, many health funds will also limit you to claiming one benefit per fund, per day. So if you receive multiple services within one consultation, you may only be able to claim the service which attracts the higher benefit.
